The Airbnb fever in Budapest is over

It seems that the Airbnb fever is over since September, and the main reason for this is that the market is full and short-term apartment leasing is not worth more than long-term one. Moreover, many condominiums complained about the chaos which came with the tourists and people of the hotel started to lobby to have stricter rules for Airbnb. And if this is not enough; many cities banned the service of the company which made them change their strategy, reports Index.

While a few years ago every person looking for an apartment to rent complained about the fact that they can choose from fewer and fewer places to live because of the apartments bought for short-term leasing, which made the prices rise to the sky. Now it seems the Airbnb fever is over in the capital city, or at least decreased.

The downtown of Budapest has been very popular among the investors, as the upswing of the capital city’s tourism made a lot of money for those doing Airbnb. Especially the new or beautifully renovated apartments were sold really quickly, to lease them to foreigners for short-term.

But recently it seems that more and more people have stopped doing Airbnb, because it did not live up to the expectations. Zoltán Schneider, manager of the downtown office of Balla Ingatlanirodák said that the main problem is that either tourists ruin the apartments, or it does not bring the expected income, compared to how much effort is needed to take care of it. Based on the statistics this trend is not visible, but the only reason for this is that there is no monthly statistics on the apartments on Airbnb, only a yearly one.

Apartments on Airbnb in Hungary

Blue: numbers of the apartments Source: Airdna.co

Autumn came with Airbnb fever gone

Lajos Micskei, who sees the market even closer, confirmed the statement of Zoltán Schneider. Micskei is the owner of Runbnb, an Airbnb management app created for the Budapest market. He reported that the process mentioned by Schneider can be felt in Budapest since September. Micskei mentioned more symptoms of the phenomenon:

It can be seen for a while that the downtown of Pest shrank, so practically only the V., VI. and VII. Districts are chosen by the tourists for Airbnb: Bajnok Street and Izabella Street already count as the suburbs, although the foreigners would reserve in these areas previously.

Still, there are more and more advertisements in Facebook groups advertising apartments for foreigners which offer apartments renting for specially Erasmus students for five-six months. According to Micskei, the reason for this is that it is sometimes more remunerative than doing Airbnb for a whole year.

These advertisements often include professional photos of the apartment which also shows that these apartments were leased as an Airbnb previously. The only way to successfully lease an apartment on this market was to use these professional photos.

Photo: Boston Globe

Micskei also thinks that it will be not worth it to do Airbnb as a result of the increase of the minimal wage. However, existing accommodations will not be able to serve the Fina World Championship in 2017, so no need to bury the industry.

Zoltán Schneider thinks similarly:

the quick stop of short-term apartment leasing cannot be expected, although the future of Airbnb is a question on the long run.

But the investors must calculate with this as an investment on the estate market that means a pay-off in 15 years. So, if the estate market significantly changes in the next two-three years those who invest their money in a new downtown apartment may suffer a serious loss.

The hotels want unified restrictions

2.2 million guest nights were registered at the public accommodations in Budapest in 2015, while this number was nearly 8 million in the case of hotels. This means the 20% of the market was given by the private accommodations advertised on the social networks. There is no data on the whole period of 2016 yet, but based on the numbers of KSH (Hungarian Central Statistical Office) while the circulation of the public accommodation increased by 21.2% compared to the period between January and October in 2015, the circulation of the hotels increased by only 5.1% in this period.

Hungarian Hotel & Restaurant Association had a suggestion to ban leasing apartments for short-terms, to restrict the rules on short-term leasing and to make it obligatory to have the permission of the other owners for the leasing in case of the condominiums. It could be learnt from the association that it is not known if the government is planning to restrict short-term leasing in the future, based on their suggestion.

However, Figyelő has recently reported based on unknown governmental sources that the new touristic strategy will be done by March which includes the restriction of Airbnb. Magyar Turisztikai Ügynökség (Hungarian touristic agency) said about this that they want a restriction which made a balance between the safety of the consumers, the quality service and the taxing discipline but not make the situation of the ones leasing the accommodations so it is not their aim to make Airbnb banned.

The people of the hotels wanted to achieve that short-term accommodations have the same restrictions as hotels do. The association explained that Airbnb is not working in a way today how the company has promoted itself originally meaning to offer a platform where sometimes empty rooms are offered to be rented for some extra money.

Unified taxation

According to the association as Airbnb started to spread the already mentioned apartments bought for short-term leasing became more and more often and it is also not rare that one individual makes profit from the leasing of dozens of apartments while even those companies appeared which does the services connected to the leasing (communication, cleaning, laundry).

According to the stuff of the hotels, it is not far from how a smaller hotel works, and they want restrictions that are based based on that fact. They want, for example, Airbnb apartments to have the same strict fire, safeguarding accessibility laws, as hotel do.

Hotels want to make it more difficult to wimp out the taxes that must be paid after the leasing. The association wants the restriction to force Airbnb and other similar pages. They want to make it compulsory to include the number of the permission, given by the local government, in the advertisements.

They also want to make the system serve data to the local government and the tax office, on the numbers of the guests, nights and the amount of money received by the apartment owner. According to Lajos Micskei, it would make sense to force Airbnb to collect the tax, then pay it, as this was successful in other cities, too.

Moreover, the hotels think that the number of the days should be limited in case of short-term leasing in a maximum of 120 days. Although, according to the Magyar Apartmant Kiadók Egyesülete, this would practically be equal with banning, as the money does not pay off in this short amount of time.

Photo: thenextweb.com

When the suggestion was formulated a HUF 32,000 per room flat price tax solution was available in case of ones own apartment-leasing. Since then, it changed to HUF 38,400, but the 27% health support also terminates. Hotel staffs asked for rethinking this solution, too.

The locals complain, the rules are getting stricter in many cities abroad

Recently it was the lobby of the hotel association or the decrease of the possible income that scared away those thinking of starting Airbnb. Two condominiums in the V. District included in their organizational and operational rules that the permission of the residents is necessary to start doing Airbnb.

The condominiums in the downtown are tired, because the moving of the tourists became disturbing after a while. But making rules will not undo the local governmental permissions retroactively, so it is not valid in case of already existing Airbnb apartments. Only the further spread of Airbnb can be prevented by this kind of development.